NBA Growth to Come from Southeast Asia, Asia-Pacific Region

China is the NBA’s 2nd biggest market (behind the U.S.), but the league believes there is room for significant growth elsewhere on the continent; namely Southeast Asia and the broader Asia-Pacific region. NBA Deputy Commissioner and COO Mark Tatum (who leads the league’s international efforts) believes the Philippines (75% of homes watched an NBA game this season), Indonesia, Thailand, Japan and Australia are best positioned to become “big markets” for the league, as the game is “growing rapidly” in those countries and the NBA has widespread broadcast distribution (25 media partners) in region. To help cultivate fans (and perhaps a few future NBA players), the league is working with local governments to implement its “Jr. NBA” program; a series of clinics designed to introduce the game to kids. The program has reached 5 million kids in Southeast Asia to date and the league hopes to reach 20 million by the end of 2019.

Howie Long-Short: Broadcast distribution was a key factor in the NBA growing so rapidly in China. The league’s partnership with Tencent (TCEHY) enables Chinese basketball fans to watch upwards of 600 league games/year via League Pass. You can’t develop a fan base, without your target audience getting to see the product.

TCEHY owns China’s top social network (WeChat) and is the world’s biggest video game publisher (think: League of Legends, Clash of Clans), but shares are down 12% to $52.41 since March 15th. The decline started shortly after the company reported rising expenses during its Q4 earnings report.

As we noted back in October, Rakuten (RKUNY) signed a comprehensive media partnership worth a reported $225 million to become the league’s exclusive distribution partner for live game broadcasts in Japan. The company’s instant messaging platform Rakuten Viber (the official IM platform of the NBA) distributes league content to its 900 million users. The deal should result in rapid growth of the Japanese fan base.

RKUNY is best known for its Japanese e-commerce business, despite a diversified portfolio that includes banking, insurance, sports and leisure ventures. In fact, the company grew Q1 revenue +14% on the back of their Fintech business (securities). That didn’t impress investors though, who remain concerned about the company’s competition (think: Amazon); shares of the stock closed on Friday just above their 52-week low at $7.20.

Fan Marino: The globalization of the NBA hasn’t just resulted in an increase in fans, it’s been a source of player development for the league as well. The 2018 Playoffs had a record 62 international players (from 33 countries) participating. All 16 teams had at least one foreign born player, with more players coming from France and Australia (7 each) than anywhere else in the world.